Hmm, yea you're probably right. I just noticed that I can get the background to show up properly in windowed mode (though its a little squiggly looking). Its only in Full Screen that I get a black background.

edit by the way, is anyone having similar audio problems, or do I need to spring for a new audio card?

Just for retextures though? It's just a bunch of PNG-compressed pixels that get decompressed and converted to N64HIGH/N64TRUE bitmaps. I'm curious what method the other emulators like 1964 do to not crash when loading large sizes of replacement texturing; I think that would be better than modifying the r4k emulator program for something that's not even related to emulation. Everything natural to the N64 couldn't need anything like this.